Even if inflation continues to slow in the second half of 2024, many Americans say they are still struggling to make ends meet.
About a third of American workers say they live paycheck to paycheck and have virtually no money left over to save after paying their monthly bills, according to a survey by personal finance website Bankrate.
For some Americans, relying on their entire income each week to cover living expenses was a harsh reality, even before the pandemic. About 38% of full-time workers nationwide said they were living paycheck to paycheck in 2016, according to job search firm CareerBuilder.
The Bankrate survey, based on 2,400 respondents in mid-May, found that low-income workers — those earning $50,000 a year or less — are more likely to be living paycheck to paycheck than those in other income brackets. Living paycheck to paycheck is generally defined as an immediate inability to pay living expenses if income is lost.
Americans are feeling cash-strapped these days as inflation has made everyday items more expensive. Gasoline prices plummet in June showed promising signs for consumers, but the increasing cost of auto and home insurance cancels out these savings for many.
Inflation has led to “outright wage destruction” for Americans whose salaries have not kept up with inflation, Bankrate analyst Sarah Foster said in a statement.
As economists are quick to point out, wage growth has outpaced inflation since February 2023. Recent federal data show that average wages rose 3.9% year over year in June, according to the most recent federal data, while Consumer prices rose only 3% over the same period.
Despite these indicators, Americans still say they feel their dollar isit doesn’t stretch as far as it used to.
For Americans living paycheck to paycheck, meeting daily expenses “is like walking a tightrope without a safety net, where balancing spending and income becomes a delicate dance,” Foster said. “Inflation is a silent thief, and it comes with a price: It often reduces Americans’ chances of living a comfortable life.”
Certainly, the cost of many basic goods, including food, housing and transportation, has increased dramatically since 2019. CBS price tracking shows. Between grocery stores and restaurants, Americans are spend more of their income on food than they have done in 30 years.
“Living comfortably is much more expensive than it used to be,” Foster said. “Prices have increased nearly 21% since the pandemic began in February 2020, requiring a person to spend $210 more for every $1,000 they used to spend on items they wanted and needed.”
Middle-income households in difficulty
Other recent research has shown that a significant share of Americans say they are struggling financially. A survey earlier this month by Primerica found that two-thirds of middle-income U.S. households feel they can’t keep up with their cost of living. Most of these households are cooking at home more often to save money, according to the Primerica study.
A June survey of 4,000 Americans by Jenius Bank found that half of respondents were losing sleep over their dire financial situation. Many respondents blamed their increased financial stress on persistent inflation and rising debt, the bank said.
A report from LendingTree released this week found that one-third of American households are financially insecure, meaning they have difficulty or great difficulty paying for expenses such as food, housing, car payments and medications.
“It’s concerning that one in three American households are financially insecure, but it shouldn’t be terribly surprising,” Matt Schulz, LendingTree’s chief credit analyst, said in a statement. “The perfect storm of record debt, extremely high interest rates and stubborn inflation has meant that many Americans’ margin for financial error has shrunk to virtually zero.”
